CBN Lowers Interest Rate to 23% Amid High Lending Costs

The Central Bank of Nigeria (CBN) has reduced the Monetary Policy Rate (MPR) from 26.5% to 23%, marking a 350 basis point cut and the lowest level since February 2024. CBN Governor Olayemi Cardoso described this adjustment as a reset aimed at enhancing monetary policy effectiveness.

Despite this reduction, commercial lending rates remain elevated, with manufacturers and businesses expressing concern that the real benefits depend on banks lowering their loan rates, which currently range from 27% to 30%. Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria, emphasized that the actual interest rates charged by banks are critical for manufacturers seeking credit.

The Lagos Chamber of Commerce echoed similar sentiments, highlighting that the MPR reduction does not guarantee lower lending rates, as banks also consider factors like cash flow and collateral. Until commercial banks adjust their rates, individuals and businesses may continue to face high borrowing costs despite the CBN's significant rate cut.